The Lobby Machine

Why The Wealthy Still Control Your Life

JPMorgan Chase was ranked the largest company on the Forbes "Global 2000" for the second year in a row. This is as clear a sign as any that banks (No. 2 on the list, HSBC, is also a bank) have rebounded strongly after the financial havoc caused by elites in 2008.

Companies were forced to lay employees off. Homeowners saw the prices of their properties drop, or worse, went through mortgage foreclosure. And due to large bailouts and plummeting revenues, governments around the world are cutting costs on an enormous scale. Thanks to the global financial meltdown, financial elites — the Wall Street wealthy — are no longer a distant abstraction in striped suits. Their influence is now real and a part of the daily lives of regular people around the world.

How could it have all gone so wrong?

The pressing question more than two years later remains: Why could Wall Street executives so easily sway the regulatory process to their advantage? Having friends in the right places certainly helps. Hank Paulson, former CEO of Goldman Sachs, was appointed Treasury Secretary under Bush, paving the way for the largest bailout in U.S. history, without which many banks would not have survived. But given the fact that it was the financial sector itself that brought about the crisis, why was it the very same people who came up with the plans for recovery?

How did it all start?

It hasn’t always been the case that regulators and financial elites shared beliefs about the deregulation of financial markets. In the decades following the Great Depression, banks and their financial elites had been reined in by the separation of retail and investment banking. But in the 1980s, this started changing, and the consequences were sweeping. In government centers like Washington and London, a complex mix of financial elites who lobbied successfully for change and lawmakers who strongly believed in deregulation became the dominant political force.